Money market instruments mainly include government securities, securities issued by banking sector and securities issued by private sector. Briefly explain various instruments.

There are various types of money market instruments as stated below: Treasury Bills: Treasury Bills are money market instruments issued by RBI at a prefixed date and of a fixed amount to finance the short term requirements of the Government of India. These are discounted securities and thus are issued at a discount to face value. The return to the investor is the difference between the maturity value and issue price. Certificates of Deposits (CDs): CD is a negotiable money market instrument and issued in dematerialised form or as Usance Promissory Note, against funds deposited at a bank or other eligible financial institution for a specified time period. Guidelines for issue of CDs are presently governed by various directives issued by the Reserve Bank of India, as amended from time to time. Inter-corporate Deposits (ICD): An ICD is an unsecured loan extended by one corporate to another. ICDs are unsecured, and hence the risk inherent is high. The ICD market is an unorganised market with very less information available publicly about transaction details. Commercial Bills: These are basically negotiable instruments accepted by buyers for goods or services obtained by them on credit. Such bills being bills of exchange which can be kept upto the due maturity date and encashed by the seller or may be endorsed to a third party in payment of dues owing to the latter. The most common practice is that the seller who gets the accepted bills of exchange discounts it with the Bank or financial institution or a bill discounting house and collects the money (less the interest charged for the discounting). Commercial Paper (CP): CP is an unsecured money market instrument issued in the form of a promissory note. CP, is issued to enable highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers (PDs), and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations.